Results in Brief

The Commission on Tourismís financial and
administrative practices did not always follow state laws, regulations, and its
policies.† We also found the absence of certain
controls led to a number of problems with the Commissionís operations.† Specifically, inadequate controls
contributed to reduced operational accountability.† The lack of controls resulted in potential unauthorized access to
customer credit card information, inventories being vulnerable to abuse,
unsupported publication cost estimates, and payment of ineligible contract
costs.† The Commission also did not
always follow rules pertaining to contract administration and other financial
activities.† Failure to follow contract
and financial rules led to questionable contracting activities and
establishment of an unauthorized bank account.†
These problems occurred because existing policies and procedures are
either incomplete or do not provide adequate guidance for key functions. The
Commission is working to improve its controls; however, sustained management
attention is needed to ensure the integrity of the Commissionís financial and
administrative practices.

Principal Findings

∑The Commission
accepts credit cards for merchandise sales and conference registration
fees.† However, the credit card
information has not been safeguarded against unauthorized access.† This is caused, in part, because the
Commission has not developed procedures for safeguarding customer
information.† The lack of adequate
controls over personal information increases the risk that sensitive customer
information could be stolen or misused.†
(page 9)

∑The Commission
does not adequately control the promotional and merchandise inventories. †First, inventory access is not controlled and
counts are not done per Commission guidelines.†
Second, inventory counts are not always reconciled to inventory records.† Finally, inventory additions and deletions
are not recorded timely. These weaknesses impact the accuracy and reliability
of inventory records.††† (page.11 )

∑As a result of
our prior audit, the Division of Publications developed cost estimates for the
production of the Nevada Magazine and Nevada Events & Shows.† However, Publications could not provide
documentation supporting how these estimates were determined.† In addition, the estimates have not been
updated since fiscal year 1997.††† (page
13)

∑The Commission
entered into a contract with an individual without properly evaluating the
contractorís status.† The Commission
contracted with an individual to manage a new program.† However, the contractor did not meet the
definition of an independent contractor.†
(page 14)

∑The Commission
did not adequately review all invoices related to contracts before making
payments.† In addition, payments were
made without adequate documentation to determine whether the charges were
appropriate and in compliance with contract terms. These weaknesses resulted in
the Commission paying two contractors for ineligible costs.† (page 15)

∑By law,
contracts do not become effective without prior approval of the State Board of
Examiners.† However, the Commission
allowed work to begin on two contracts prior to approval by the Board.† This resulted in at least $7,500 in contract
liabilities before the contracts were approved.† (page 16)

∑The Commissionís records do not fully
support why five of seven contracts we reviewed totaling over $227,000 were
awarded based on sole source.† In
addition, none of the five contracts were approved by the purchasing
administrator as sole source.† This
practice could result in the Commission entering into contracts that are not in
the best interest of the State.† (page
16)

∑The Commission
on Tourism maintained two outside bank accounts during our audit period.† However, one of these accounts was not
properly authorized by the State Board of Finance, and the other was not
reported to the Office of State Controller as required by state law.† (page 17)

∑Although the
Commission has developed a procedures manual, these procedures could be
improved to better control the Commissionís financial activities.† (page 18)